The Morris Corporation has $600,000 of debt outstanding, and it pays an tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, then its bank will refuse to renew 7-10 Times-Interest-Earned Ratio interest rate of 8% annually. Morris' annual sales are $3 million, its the loan and bankruptcy will result. What is Morris' TIE ratio? average QUESTION 2 Chapter 7 - Problem 10: Change the value of debt outstanding in cell C4 from $600,000 to $700,000. Record the new calculated value of the times interest earned (TIE) ratio visible in cell C11 in the space provided. [Format the value as a number with two decimal places. For example, 1.23] A B C D E F G H j $ 700,000 8.0% $ 3,000,000 40.0% 3.0% 1 Problem 7-10 2 3 INPUT 4 Debt outstanding 5 Interest rate 6 Annual sales 7 Tax rate 8 Net profit margin on sales 9 10 OUTPUT 11 TIE ratio 12 13 Sales 14 Costs 15 Depreciation 16 EBIT 17 Interest expense 18 EBT you will need to complete the income statement calculations below to solve for the TIE ratio You do not have the information to complete these cells. You will have to work from the bottom of the income statement up to EBIT. 4. Now solve for EBIT 3. Using the debt outstanding and the interest rate on debt, solve for the interest expense 2. Using net income and the tax rate, solve for EBT optional as this value is not needed in final calculations 1. Start here - calculate net income from the information above 19 Taxes 20 Net Income 21